Trump holds back on Iran trade sanctions

President Donald Trump’s administration announced a possible expansion of sanctions on countries doing business with Iran, part of an “economic D-Day” against Iran’s financial connections. The US is launching an “economic onslaught” against Iran, according to Treasury Secretary Scott Bessent.

Bessent declined to say what specific countries would be targeted or when those penalties would take effect. He said the US wants to “level set and give people a cure period,” but warned that action would be taken quickly.

China has been the biggest buyer of Iranian oil, and Washington has intensified efforts to clamp down on Chinese purchases. However, the US has stopped short of targeting larger Chinese banks with sanctions.

A meeting between Trump and Chinese President Xi Jinping is scheduled for late September in Washington. New sanctions on Chinese banks could affect prospects for extending a deal struck last November to keep Chinese rare earths flowing and cap US tariffs.

Bessent announced sanctions on nearly 60 entities, individuals, and vessels. The Treasury is targeting five sectors Iran uses to prop up its economy: digital assets, gold, technology, aviation, and shipping.

Trump’s war with Iran has pushed energy prices higher worldwide. While heavy fighting has subsided, diplomatic efforts to end the war have stalled, and oil and raw material shipping through the Strait of Hormuz remains blocked.

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Trump’s approval rating has fallen to a low point, with just 33% of Americans approving of his performance. Trump says the economic costs are necessary to ensure Iran does not have a nuclear weapon.

The US has maintained sanctions against Iran for decades, aimed at curtailing the country’s oil revenues, aviation sector, and procurement of weapons components. The sanctions bar designated entities from the dollar-based financial system.

Iran has been successful in evading the sanctions by standing up new front companies and vessel registrations. They have sanctioned independent Chinese “teapot” refineries for purchases of Iranian oil and expanded their targeting of the shadow fleet of tankers transporting Iranian oil.

The US, UN, and EU have applied sanctions, implemented trade embargoes, and frozen assets since the late 1970s over Iran’s nuclear program, human rights violations, and support for militant groups.

Recent measures have targeted Iran’s shadow oil fleet, shipping insurers, entities and people enabling Iran’s acquisition of weapons, and digital exchanges, freezing an estimated $500bn in Iran-linked cryptocurrency.

The US blockade of Iran’s ports has already curbed Chinese offers to purchase Iranian crude.